Insurtech solutions are creating ripple effects across the entire insurance industry thanks to their innovative and digital-first approach. By addressing inefficiencies in the traditional insurance model, insurtechs are expanding their reach to underserved communities with tailored and affordable products. Thus, insurtechs are playing a vital role in bridging the global insurance gap, ensuring more individuals have access to essential coverage that wasn’t previously available to them.
In this article, we will define the global insurance gap, identify the factors that have contributed to it, and explore how insurtech innovations are helping to bridge this gap and bring coverage to more people around the world.
Learn more about Insuresoft’s Diamond Platform.
What Is the Global Insurance Gap?
The insurance gap, sometimes referred to as underinsurance, describes inadequate insurance coverage—not being covered financially in the event of a disaster. The insurance gap is largely seen in emerging markets or underserved populations. People who are underinsured will be more vulnerable to financial hardships caused by unexpected events.
There are many factors that contribute to the global insurance gap, including a lack of education about the benefits of insurance, poor trust in insurers, and high premium costs, which we will discuss in more detail below.
The Limitations of the Traditional Insurance Model
While the traditional insurance model has worked well for many people, it hasn’t always been accessible to everyone:
Higher Costs
One large limitation of traditional insurance, as we mentioned above, is cost. Insurers have historically relied on extensive networks of agents, brokers, and underwriters. This has created high operational costs, which have then been passed down to policyholders through higher-priced premiums.
Such policies aren’t financially feasible for everyone who needs coverage, particularly if insurers impose minimum premium requirements for all policyholders, regardless of their coverage needs.
Complexity
Another common challenge of the traditional insurance approach is that insurance products can be complex and often involve a lengthy application process. This can put off potential policyholders who don’t feel equipped to complete the process, or don’t understand how they’ll benefit from having insurance coverage.
Geographic Limitations
Traditional insurers may not even offer coverage to geographies that they deem higher risk, especially in emerging markets. Again, because of the higher operating costs of the traditional model, profitability may be a factor that prevents insurers from offering coverage in these areas.
Lack of Trust
Individuals in underserved communities with a history of mistrust in financial institutions may feel hesitant to purchase insurance. Without establishing trust with this market, insurers may not be able to attract potential policyholders in certain populations, leaving many people underinsured. Even just one bad experience with a past insurer can leave people with a general feeling of distrust in the overall industry.
Learn more about Insuresoft’s Diamond Platform.
How Innovative Insurtech Solutions Can Help
The innovative nature of the insurtech industry has helped to address some of the inefficiencies found in the traditional insurance market. For one, insurtechs help people gain access to accurate and real-time information about pricing and policy details online. Traditionally, this information was only available by visiting an office or speaking to a representative over the phone. This is not only potentially intimidating, but might not even be available in all markets.
Another innovation from insurtechs that is reshaping the traditional insurance market is that policies can now be distributed digitally, eliminating the need for all the intermediaries who have traditionally made the purchasing and application process more complex. Plus, this greater efficiency helps keep premium pricing low and more accessible to people in underserved communities.
Additionally, insurtechs’ capabilities regarding AI and data analytics have developed significantly in recent years. These advanced technologies allow insurers to consider a wider range of data points when performing risk assessments of potential policyholders. In turn, this can lead to better pricing and tailored coverage options that are more suitable for people who are currently underinsured.
How Insurtechs Like Insuresoft Are Bridging the Gap
Bridging the insurance coverage gap will not happen overnight. However, innovative insurtech solutions are spurring meaningful improvements and helping more people access the insurance coverage they need to be financially protected. This is largely driven by the greater efficiencies that insurtechs can provide and that make insurance products more digitally accessible.
Insuresoft offers a number of solutions and services to help insurers address the traditional insurance limitations that we discussed above. At a high level, Insuresoft’s Diamond Platform helps insurers become more agile and able to meet the evolving demands of the market. This all-in-one solution streamlines insurers’ back-end operations so they can focus on more strategic initiatives like entering new markets or launching new products, helping to close the insurance gap.
We also help insurers offer self-service capabilities to eliminate some of the complexity, confusion, and barriers surrounding insurance that have kept people away from the industry in the past.
To learn more about how Insuresoft can help you empower potential policyholders and work on closing the insurance gap, reach out for more information about our available solutions.
Learn more about Insuresoft’s Diamond Platform.
